commentary Former Optus executive Paul Fletcher's book Wired Brown Land? Telstra's Battle for Broadband details the history of broadband communication in our nation and highlights why it is impossible that Telstra will give up in its fight for dominance, despite the wounds it has recently taken.
Paul Fletcher's Wired Brown Land?
Telstra's Battle for Broadband
(Credit: UNSW Press)
Fletcher has worked as the director of corporate and regulatory affairs at Optus and before that, as telecommunications advisor and chief of staff to former Communications Minister Richard Alston. Naturally given the Optus connection, his opinions in a book almost solely about Telstra have to be weighed carefully.
From his first chapter, entitled Creating a monster — and trying to tame it, he explains how it was that the Australian government formed an entity with such powerful market dominance and how regulations introduced to cage its raw energy didn't work, because they assumed that the dominant player would willingly come to the table to negotiate access terms, something that made no sense for it to do.
I do agree with him on this point. Any company that is trying to make a profit will always try and escape any efforts to tame its profit potential, however detrimental that potential is to the national interest — something Fletcher doesn't blame Telstra for, although he did take the time to lay a couple of solid blows below the belt at chief rival and departed Trujillo amigo Phil Burgess.
Given this fact, Fletcher pushes the importance of market structure rather than technology to create a workable background for competition, something that made him look askance at the Telstra offers to build a national broadband network, as long as certain market conditions were met.
He believed, after describing near misses where the government almost gave in to temptation and allowed Telstra to build an NBN, that the government should never cave in to such demands, and applauded the Labor Government's decision to throw Telstra out of its $4.7 billion process after the company wouldn't play ball.
Fletcher knew that the government would have a hard road ahead of it, most likely facing legal action and needing to wield the legislative stick, but he believed it was the right decision. He also believed that decision would force Telstra to a new tack.
"The rational course of action for Trujillo's replacement will be to recognise that the government is determined to impose change, and to negotiate cooperatively to secure the best possible outcome for Telstra," he said. He thought that if Telstra continued its path of destruction, it risked too much. "Ultimately I think Telstra will recognise the risk it faces and back down," he said.
Yet to me, this contradicts what he has said throughout his book that Telstra, logically, looks out for Telstra. Not long after the announcement it had been thrown out of the former NBN process, Telstra announced it was upgrading its HFC cable, giving a spectacular middle finger to the government. Telstra's many public speeches after it was unceremoniously abandoned by the wayside were unapologetic for the company's stance. Its message: we can do well without the NBN. Telstra was still ready to fight.
The announcement on 7 April that the government was doing the equivalent of throwing the monopoly board up into the air and starting again with fibre-to-the-home did change the dynamics, however. It unfortunately came after Fletcher's book; those looking for pearls of wisdom on this topic won't find them between its covers.
If Fletcher's book said one thing ... was that no matter what altruistic ideas many might have about making Australia a digital hub, when the government is involved, politics can distort that notion to fit its needs.
Telstra became suddenly quite docile in its public statements, leading people to believe that the threatened stick of separation and HFC cable divestiture and the carrot of being able to participate in the government's network after all had achieved a complete turnaround in the company's approach.
Reports have intimated that Telstra is ashamed of its lack of progress under outgoing CEO Trujillo, and will return to a CEO who will play nicely with the government and competitors like Ziggy Switkowski did.
Yet Fletcher himself says that despite the outward appearance of very different approaches to leadership, Telstra's management has always followed the same path. "Trujillo and his colleagues have been more aggressive in their rhetoric — but in his ruthless exploitation of Telstra's market power Trujillo has followed fundamentally the same approach as his two predecessors."
Why should it change now? Telstra will still be looking out for Telstra and if it doesn't why is the board making such an illogical choice of CEO?
Which makes the next few months very important. Will the government stick to its guns on the regulatory changes? Will political pressures impinge to make the government strike compromises with Telstra as its predecessors have been tempted to do in the past?
If Fletcher's book said one thing, even if he didn't mean it, was that no matter what altruistic ideas many might have about making Australia a digital hub, when the government is involved, politics can distort that notion to fit its needs.
It was politically expedient to create Telstra, create a broadband network policy, and now to have some progress on that network. Time is an important issue in politics and Labor's time has been running through its hourglass since November 2007.
When contacted about what he thought of the new network, Fletcher said that it was difficult to say at this point how realistic the policy was until the details of the implementation study were revealed. However, he did admit that despite the government's proposal to separate Telstra, the old monster had some power yet.
"We can certainly expect there's going to be some very substantial arm wrestling," Fletcher said. "It's taken a blow — there's no doubt about it — but it's also a very powerful, well resourced company."
So show us your guns Conroy. Hope they're up to it.
Fletcher's book, published by UNSW Press, will be launched this evening.